Welcome to Latour Year- End Report 2022 presentation. For the first part of the conference call, the participants will be in listen-only mode. During the questions and answer session, participants are able to ask questions by dialing star five on their telephone keypad. I will hand the conference over to the speakers, CEO Johan Hjertonsson and CFO Anders Mörck. Please go ahead.
Hi. Welcome to our conference for the full-year and the Q4 report for Investment AB Latour. At my side here, I also have Anders Mörck. Welcome, as I said, everybody. If we start with the first slide here, our overall group structure is unchanged from the last quarter, no changes there. It was a good end to the year despite the declining economic climate and the global turbulence. We'll come back to that more later. It's been a high pressure on our organizations to handle a variety of challenges, cost inflation, disturbances in supply chain, war in Europe, et cetera, et cetera. All levels in the organizations are working hard, we're handling the challenges very well, I would like to say.
This is resulting in, for our wholly owned business, in the best quarter so far in absolute figures. Earlier this week, we revised our financial targets. That's been communicated earlier this week. Our 10% EBIT target has played out its role, and we have raised that to a minimum of 15%, measured as an average target for the whole group, which caters for a diverse portfolio of companies that we have. Many of our businesses perform well above that target, but we'll come back to that a little bit more later in the conference. If we go into the next slide. This is a new slide for those of you that have followed these earnings reports earlier.
Here I would like to comment our 10 listed companies and focus a little bit more on the underlying profit development. The picture illustrates the holdings profit development 10 years back, which clearly has been quite positive as you can see. A majority of our holding has grown with double digits and maintained the profitability during these years. We do own quality companies who have the ability to grow and win market shares in both booms and recessions. Our holdings development in 2022 has in general been good. Some of them very good, I'd like to highlight. However, the profit development during 2022 has also been reflected in the share price development, which you see on the next slide. Has not been reflected, as you will see on the next slide.
Hence, I think it's valuable to comment and highlight the actual very positive journey that these companies has made over the last year. share prices, they vary a lot over time and there's not always a fully correlated line to profit development and the share price development. Acquisition-wise, the activities has been high in the listed portfolio. During 2022, a number of acquisitions was concluded. One, a large one to mention is Securitas entered into the acquisition of STANLEY Security in July, and thereafter did a right issue to finance that acquisition. Latour participated with SEK 1 billion. Alimak entered into the acquisition of Tractel in November, and we are going to participate in the following right issue during Q1, which was part of the financing for that acquisition.
This Wednesday, CTEK announced its need for a right issue of SEK 350 million. We are as a responsible long-term owner committing our part in the right issue, which corresponds to SEK 108 million. We're also guaranteeing the remainder of that right issue should the right issue not be fully subscribed. We can go into the next slide, with what I just commented, one should look at this slide. There's no change within the listed portfolio other than we participated in the Securitas right issue, as I just said. This was a broad decline in the stock market during the year, affected by the unstable economic climate and unsure future outlooks that we had last year.
The investment portfolio was down almost 35%, and the SIXRX was down almost 23% during that time period. Until yesterday, the portfolio value increased somewhat, and at the end of December, the value was SEK 74.9 billion. The total return so far this year is 16.7%, whereas the SIXRX benchmark index is 10.3%. Those numbers as of yesterday. We can go into the next slide, please. I'd like to comment on our wholly owned business. We had a very strong end of the year. Actually the best quarter result ever in absolute figures so far. The continued underlying demand in most markets, I would like to point out.
Supply chain issues remain, there is a slightly better situation than earlier in the year. Our top line, the invoicing increased 22% in the quarter. The general cost inflation and increasing energy prices put short-term pressure on our margins. Several price increases have been made, combined with high volumes with good cost control, the quarter result is growing by 29% quarter-on-quarter Q4 to Q4 to SEK 329 million, with a margin of 14.5% in the quarter compared to 13.8% in Q4 last year. If I comment a little bit on the full-year, of course, it's very much marked by the war in Ukraine, here in Europe, and the overall geopolitical turbulence.
However, with these headwinds, I'm very proud to say that our operations have developed very positively. Total growth of order intake of 15% and net sales of 24%. Our operating profit total grew 20% to SEK 3.194 billion with an EBIT margin of 14.2% compared to 14.6% the year before. We continue to invest in our holdings with a forward-looking view to continue to drive future growth, and we are investing heavily in product development and marketing and sales activities. We also continue to drive and invest increasing the networking between our wholly owned companies and also our listed companies. We are very well-positioned with high-quality earnings and engaged employees.
We're proud of the result, we're very happy and looking forward, going forward. Then I'd like to comment on the acquisitions for 2022. Actually this time it's been so many acquisitions, I won't read out a full description of every acquisitions we've done. However, I have a couple of comments. The total annualized top-line contribution is SEK 1.4 billion from these acquisitions. Also in the beginning of January, we closed, which is after the reporting period, we closed another acquisition for Swegon with Dalair in the U.K. Two of these acquisitions last year are in North America. I would say both organically and through M&A, we are increasing and strengthening our foothold in the North American market.
I think, overall we have finalized 11 transactions during the year. That's, as I said, added almost close to SEK 1.5 billion in net sales. I think with that, I would hand over to Mr. Anders Mörck. Over to you.
Thank you so much, Johan. I hope you don't mind me making a short correction because you actually said that our profit grew to SEK 329 million during the quarter, but it's actually SEK 600 million more. It's, it grew by 29% to SEK 929 million. Sorry for that, Johan. I thought it was a good thing to correct.
Very nice. Thank you.
Yeah, sorry. Now we start talking about Bemsiq, the first business area. You can see on the picture, on the right side of this picture, you have the last quarter, but I think it's important to see the long-term development, then you look on the left part of the picture instead. As you can see, it has been quite impressing during a few years for Bemsiq. The quarter had a strong underlying demand, again, in a growing market. The total growth was 20%, whereof 10% were organic. The lack of components in the business is still an issue, but it's still handled very well, and so is also the price management, done by the management in the companies within Bemsiq.
The strong growth also means that the company Bemsiq and their subsidiaries have to employ a lot of new people, and, so they do. We put a lot of efforts into product development and also in sales, which will build a good basis for future growth, but it will also increase the cost base going forward, of course. All in all, a fantastic year for Bemsiq, and, as you see on the picture then, as I mentioned, a strong development now for several years. Finally, as a remark, Johan mentioned an acquisition of DENT before, and it was a lot of work done by the team within Bemsiq at that time, and I know it was finalized more or less during Christmas. A lot of blood, sweat, and tears by the people doing this job, so thank you very much.
All in all, very well done. We go to the next business area, which is Caljan. Also here you can see a fantastic long-term development for several years now. After a long period of very high order intake, we now see lower order intake, this is very much due to that customers within e-commerce make fewer investments than they did during the COVID period, which at that time meant extremely high growth. However, the order book is still very high, which cover this year, 2023, for a good part, so it looks good. The net sales, as you can see, has developed very much in the positive direction during the year, grew by 34%, sorry.
Also during 2021, the growth was very high, so the result for Caljan is very, very good as a consequence of that. Very well done all people working in and for Caljan. Let's go for Hultafors Group. The net sales for Hultafors Group grew by 14% in the quarter. Also in this picture, I think you should look on the long-term development, which is really impressing, I must say. Currency fluctuation has been a challenge for Hultafors. It both affects net sales positively, but a large base of the cost base is dominated in the US dollar, which has been very strong during 2022. All in all, price management has been handled very well, and so also the cost control within the group.
All in all, the profit for the quarter increased to SEK 316 million, corresponding to a margin of 16.8%. For those of you that already have read the full report on page nine, you now can note that Hultafors pro forma-wise actually reached SEK 1 billion in EBIT exactly. That's a fantastic achievement if we look back a few years. Johan mentioned before that we made an acquisition in U.S. of Martinez Tool Company. Welcome to our group and all in all, Martin and team, very well done during 2022. Let's go to Latour Industries. You can see here good underlying demand. The order intake grew by 7% during the quarter. Also strong net sales, total growth of 23%, including acquisitions, 9% organically growth during the quarter.
Quite a positive development on top line. However, for small companies, increased cost for raw material, transportation, and energy, and also these problems within the supply chain, makes a tougher environment for the companies within Latour Industries. But here, as we have said many times before, the profitability can be much higher, and we still believe it will be going forward in the future. We build for future profitability and growth. That's what we had to say about Latour Industries. Let's go for the next business area, which is Nord-Lock. The underlying demand increased actually during the quarter, totaling a growth in order intake of 21% and a 9% organic growth in sales.
As you know, the situation for Nord-Lock is that they have had relatively large exposure to China, and the Chinese market has been a problem during both 2021 and 2022. We saw a slight recovery coming back during the end of the fourth quarter this year. In total, relatively strong net sales, total growth of 17% and organically by 6. Operating result, however, negatively affected by the slow Chinese market, and it amounted to SEK 74 million, the same level as last year with a margin of 17.9%. Considering the slowdown in the Chinese market, we think it was overall a very good year for Nord-Lock. Well done, Fredrik and team. Let's go to the last business area then, which is Swegon.
Here you can see that Swegon had a very, very strong quarter with 5% organic growth in order intake and 20% organic growth in net sales. For those of you that have followed these results before, you know that Swegon had major problems in the second end of the second quarter due to the supply chain issues. Now we can see that it has been a remarkable recovery made by Swegon, so the achievements we now see is truly remarkable. The operating result for the quarter increased to SEK 299 million, which is a record level with a margin of 14.1%. Very, very well done under the circumstances. Let's go for the net asset value. We leave the business areas.
As you can see, the net asset value amounted to SEK 159 at the end of the year, so it decreased by 25% during 2022. This is very much a consequence of the share price development of the listed portfolio, of course, that we talked about before. The share price for Latour at the end of December was SEK 197. That would mean a premium to a net asset value of 24%. Yesterday, the net asset value had increased to SEK 176 per share. The share price closed at SEK 226, giving a premium to about 28%.
Our net debt situation increased during the quarter to SEK 11.1 billion, this was of course due to the acquisitions we made, a high acquisition activity in the wholly-owned operations and also the Securitas rights issue. Now the net debt corresponds to about 10% of the market value of our investments, which still is on a reasonable level. Okay, that's what I had to say, Johan. Back to you.
Thank you, Anders. We can go into the next slide. I'd like to comment on the financial targets for 2022, which is an annual growth of more than 10%, operating margin of more than 10%, and a return on operating capital 15%-20%. If we kind of lay out our results according to those targets, during the last 12 months, which is last year, we had a growth of 23.7%. We had an EBIT margin of 14.1% and a return on operating capital of 15.5%. We have delivered on all of these three targets, great performance, and we're very proud as a team, and thank you all team members for this great achievement.
We have had a very nice trajectory over the last 10 years, moving from around 10% to closer to 15. In 2022, we ended up at 14.1%, as we said earlier. It was time to revise the financial targets, as I said in the beginning of this call. If we go to the next slide, you see the new revised financial targets. We have revised the operating margin target from 10 to more than 15%, and we have clarified the return on operating capital to be more than 15%. Hence, you know, it's no problem if you're on 25% or higher, so yes, more than 15%. When it comes to the growth target, that remains 10%.
Of course, it's a combination of acquisition and organic growth. We would like to point out that organic growth shall be prioritized going forward. As of today, the new financial targets also apply over a business cycle. I'd like to emphasize that we fully support all of our existing holdings, going forward, we will keep, and we will make assessments based on all the three financial targets combined, going forward. The next slide, please. There you can see on the dividend, good development and a strong financial position gives us the possibility to increase the dividend.
The board of directors of Latour proposes an increased dividend to 3.7 SEK per share, which corresponds to an increase of 12% compared to last year. The proposal is in line with our dividend policy, and I think now we can show a strong historic trend of increased dividends. One should also read the increased dividend as a sign of confidence for the future going forward for us in Investment AB Latour. We go into the last slide. As you can see, we are delivering on our growth target, both organically and acquired growth. I would like to sum up, we have a great financial strength, and we will continue to invest in new holdings to enable future growth also going forward.
As you can see on this slide, it's a big world and the potential is large. Lastly, I'd like to say we are closely monitoring the macroeconomic development and are always prepared to act and react to changes that affects us. Lastly, really lastly I'd like to say, do not forget, we have been living in kind of a crisis mode since 2020. You could say first two years of pandemic, and now the war in Ukraine. I think it's important to really put our employees first. Many of our employees have worked under a high stress level during quite a long time. It's important we take care of each other and think closely about each other, and that's actually number one.
Let's, I ask you all, to really do that when we move forward. Thank you very much for listening in. That opens up for the Q&A session. Anders and I are ready to take your comments and questions. Thank you.
If you wish to ask a question, please dial star five on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial star five again on your telephone keypad. The next question comes from Joachim Gunell from DNB Markets. Please go ahead.
Good morning, Johan and Anders. I have three questions for you. Starting off here where you ended, Johan, with regards to, how a more, call it, positive, outlook is reflected in the, call it, raised DPS here. Can you just say anything about to what extent you believe that the visibility here is better into, call it, the early parts of 2023 than you would have, say, two, three quarters ago? And also, we saw a slight decline organically in the order momentum. What in particular that pertains to, if there are any particular business area or in addition to Caljan that you would like to highlight or any geographical regions? Thank you.
Thank you very much, Joachim. If I take on the dividend and how we see kind of forward looking and then maybe Anders Mörck you can pick up. No, I think it's important to remind ourselves. I think I'm more saying, you know, we stand strong. We have very good businesses. We have good teams in place in our businesses and but to judge the future going forward is, it's very difficult at this time. It's more a reflection that we feel we have the house in order and we are ready to react and move forward. Having said that, I'm positively surprised that the market demand is holding up as well as it is doing.
I think I end there. Anders, you can add to that also, or go into Joachim's other questions.
No, I totally agree to you. Of course, it's the macroeconomic climate is not us, so to say. We will be affected if it will get worse and, but so far last year was very good and we didn't see too many problems.
Understood.
And, uh-
Can you say anything just about the organic, call it momentum? Obviously, you're facing quite high comparables as well, but is there in the order intake, anything besides Caljan that showed negative year-over-year development?
Anders, would you like to start?
We have so many business areas and of course, the picture looks different for different companies. Bemsiq, I would say, had the best development when it comes to order intake, but also it looks quite good for most of the companies.
Mm-hmm.
It's a little bit difficult to interpret order intake since it's for a long time, starting already in 2021, where we had high order intake. There, as you have seen, there has been a spread between order intake and net sales. To some extent, in the long run, this spread will have to normalize and the order intake will have to come out in net sales. And it could be when the thing normalizes, so to say, that an order intake will temporarily become lower because of that. Then we have the order backlog to deliver still.
Yes.
So...
I think we should say overall, I'm quite positive we have a good business momentum, you know, in our businesses. Then Caljan, as you pointed out, Joachim, I would say that was also a very expected decline in order intake after a very strong booming order intake in the e-commerce sector during the 2 years of the pandemic. Now the investment levels in the e-commerce sector is down. That's, you know, very expected, I would like to point out. I hope that gave you some light on your question, Joachim.
It did. Thank you. My second question basically relates to the fact that we've seen operating margins now, I mean, improve year-over-year, which is, call it reversing the negative year-over-year effects we saw earlier in 2022. Swegon seems definitely to be the main driver here. Is there anything that you can say with regards to a nuance shift, whether it's the pricing or if it's just better delivery capability, with the supply chain easing up that's driving this and perhaps also what's the durability of this improvement is in Swegon?
I would say it's a durable improvement. It's kind of a real improvement and it's a combination of many things. Swegon has worked very highly, you know, to improve their gross margin, which is a combination of pricing and cost efficiency and product mix in that and also market mix in the Swegon case. I think they've done it very well. I expect it not to go this positive improvement in the gross margin and hence in the EBIT margin, I expect it not to go away. I expect it to continue.
Great. Just the final one then. Can you say anything about where net debt levels are in relation to your target thresholds? Also, how this will basically impact what financial headroom you see after the rights issues in Alimak and CTEK here in 2023? I think you've said roughly SEK 2 billion-3 billion before. Should I just net out the CTEK and Alimak rights issues from that?
I would say, I would answer yes to your question, and then you're pretty right. Right, Anders?
Yeah. Yeah. When we talk about investment room, and we know that we have investments in pipeline that are committed, then we already think about that, so.
Mm-hmm.
All in all, it's not far away, I would say.
Yeah.
That's all for me. Thank you very much.
Thank you, Joachim.
As a reminder, if you wish to ask a question, please dial star five on your telephone keypad.
Johan, from the webpage.
Yeah.
It comes from Carl Ragnerstam at Nordea.
Yeah.
Could you please give some flavor on the order intake development in Swegon or comments around the underlying market sentiment? Could you also please help us to understand the EBIT bridge in Swegon, i.e., what are the most important drivers? Would you say that the Q4 margin is the temporarily boosted by the catch-up effect as a result of the.
Yeah, yeah.
component shortages?
Yeah.
In that we should not extrapolate.
Yeah
... the uplift too much going forward.
Yeah.
Carl, I read your question, and Johan will answer it.
Yeah. I'll try. I think we answered it to some parts when we discussed with Joachim here earlier. Of course, this, the strong kind of, you know, invoicing in Q4 that the factories was really catching up after the weak summer, which was due to component shortages. Of course, that has a temporary effect on also on the margin because we run at, you know, very high volume. I would say it's a combination of that, but also there is a, you know, fundamental, kind of structural work in improving, especially the gross margins in Swegon.
I would say you, some is the strong volume, but there is also an underlying, you know, fundamental uplift in the margin and it's fueled from the gross margin development, yeah, in Swegon. I hope that gives some light to your question, Carl. Great.
Great. We don't see any more questions on the web.
I think we... There's no more questions from direct from the audience, is right? We can.
There are no more questions at this time, so I hand the conference back to the speakers for any closing remarks.
ood. Thank you all for listening in. I hope to talk to you when we present the Q1 result later this year. Thank you all very much, and I wish you eventually, later today, a great weekend wherever you are out there. From Anders and me, thanks